It has been a rough year for the House of Mouse. The pandemic’s disruption to Disney’s (DIS) 2020 has resulted in shuttered theme parks, a halt on live film production and delays to its movie release schedule.
However, writing off this entertainment giant would be unwise, says Tigress Financial analyst Ivan Feinseth. The 5-star analyst believes the issues facing Disney are short term ones and tells investors to take the long-term view when considering Disney as an investment.
“DIS’s industry-leading position and strong brand equity will drive a reacceleration in long-term business performance trends as it eventually overcomes near term COVID-19 driven headwinds,” Feinseth noted.
So, what lies behind Feinseth’s buoyant take?
Amongst the many disruptions to Disney’s global spanning business, the newly launched streaming service Disney+ has been a beacon of light. Feinseth notes the new service has been “an incredible success,” and has the numbers to back up such a claim. With 60.5 million paid subscribers in only eight months, the figure far exceeds the low end of Disney’s initial five-year plan laid out in April 2019. With an unparalleled list of hits, it would be foolish to underestimate the “power of Disney’s content.”
“Content is King, and DIS remains the King of Content, which is driving the success of its DTC streaming platforms and the further halo effect it will have when its studios resume production, and its theaters and theme parks reopen,” Feinseth added.
The expansion of Disney’s DTC (direct to consumer) platform should provide another tailwind. Next year, Disney will launch an international DTC service under its Star brand. The service will boast content from ABC Studios, Fox Television, FX, Freeform, Searchlight, and 21st Century Fox.
What’s more, despite the pandemic’s best efforts, Disney’s balance sheet remains in rude health. Exiting June 2020, Disney had $23.56 billion in excess cash and the company anticipates generating $11.12 billion in economic operating cash flow in the near-term despite “COVID-19 pandemic-driven diminished expectations.”
Accordingly, Feinseth reiterates a Buy on Disney shares. As is the Tigress Financial way, there is no 12-month price target attached. (To watch Feinseth’s track record, click here)
The rest of the Street is currently displaying mixed feelings toward the Content King. With 10 Buys, 9 Holds and 2 Sells, DIS has a Moderate Buy consensus rating. The analysts expect shares to remain range bound for the foreseeable future as indicated by the $128.56 average price target. (See Disney stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
